Texas gas retailers are in for a tough time. The federal Court of Appeals for the DC Circuit ruled earlier this year in favor of the Environmental Protection Agency (EPA) on a challenge to the introduction of a higher corn ethanol blend in gasoline. The new higher blend would contain 85% gasoline and 15% ethanol, and is nicknamed “E15”. It is an increase over the old 10% ethanol standard. The EPA approved this new blend in 2011 for cars and light trucks made since the model year 2000, but banned it for light equipment and older vehicles. Bio-fuels makers sought the higher blend rate as a way to satisfy a federal guarantee of a share of the gasoline market, set at 13.2 billion gallons in 2012 and rising to 15 billion gallons annually from 2015. The EPA gave its final regulatory approval of E15 in June 2012.
In the legal challenge before the DC court, food businesses claimed that E15 would raise the price of corn. Governors from four poultry-raising states asked the EPA for relief from this E15 mandate because of its impact on feed. The worst drought in 50 years has seen the corn crop decrease by 13% this year, and the governors say that this crop is too small to withstand 40% of it being used in fuel without a severe economic disruption.
The engine manufacturers claimed they could be open to liability if their engines malfunctioned due to the new fuel blend. Charles Drevna, the president of the American Fuel & Petrochemical Manufacturers, and Bob Greco, a director at the American Petroleum Institute, both claimed that E15 approval comes before testing of E15 in vehicles is complete and that it has already been shown to cause damage to engines. Vehicle manufacturers are already putting warnings on their gas caps that using E15 could void their vehicle warranties.
The opinion of the three judge panel on the DC Court of Appeals ruled two to one that the petroleum industry, engine manufacturers and the food industry did not have legal standing on the matter. The Court stated that these industries failed to sufficiently demonstrate how they were harmed by the approval of E15. Critics find this astonishing, especially for the petroleum industry, which is required to comply with the federal mandate on ethanol in the 2007 Energy Independence and Security Act.
Currently, only one gas retailer in Kansas is selling E15 fuel. There are practical barriers to the new requirement, such as installing new blender pumps that can dispense this type of fuel. Out of 160,000 gas retailers in the United States-gas stations, truck stops, convenience stores, grocery stores and marinas-only about 2,500 have pumps that can handle gasoline blends higher than the old E10 blend. Aside from the expensive practical barriers, a lot of businesses are afraid of liability if something goes wrong with the E15 gas blend, such as someone putting it in a car not meant to burn it, thus harming the car’s engine or voiding the warranty. Business owners note that consumers are not asking for E15, and its use will likely be slow to spread.
The ethanol industry has been going down the tubes for years. This is the federal government’s way of trying to shore up another losing proposition.
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